ASX futures were 31 points or 0.42% down as of 8:00am on Thursday, pointing to a loss at the open.
US stocks fell Wednesday, reversing the prior session's rally, as investors focused on what recent remarks by Fed Chair Jerome Powell mean for the trajectory of interest rates.
The S&P 500 retreated 1.1%, a day after the benchmark index jumped 1.3% in a volatile session. The Dow Jones Industrial Average fell 0.6% while the Nasdaq Composite Index lost 1.7%. On Tuesday, all three indices closed higher.
One focus for investors this week has been comments from Fed officials. Following Mr. Powell's remarks on Tuesday, Fed governor Christopher Waller said in an appearance Wednesday that the central bank will need to keep monetary policy sufficiently restrictive for a few years to tamp down inflation. He added that the quarter-percentage point increase the Fed approved last month "seems like the right size to adjust policy."
Traders will continue to watch for any shifts in tone after last week's stronger-than-expected jobs report, which stoked concern that the Fed could end up tightening monetary policy by more than expected.
In commodity markets, Brent crude oil edged up 1.60% to $US85.03 a barrel while gold added 0.07% to US$1,874.46.
The yield on Australian 2 Year government bonds edged up to 3.24% while the 10 Year yield climbed to 3.61%. US Treasury notes also edged higher, with the 2 Year yield reaching 4.45% and the 10 Year yield increasing to 3.65%.
The Australian dollar declined slightly to 69.23 US cents from its previous close of 69.56. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, climbed to 96.33.
Asia
Chinese stocks ended the session lower, extending this week’s range-bound trading pattern as the market's earlier reopening-driven rally eased. The benchmark Shanghai Composite Index edged down by 0.5% to settle at 3232.11. The Shenzhen Composite Index and the ChiNext Price Index both shed 0.5%, to end at 2141.31 and 2525.88, respectively. Consumer goods and services providers led losses, pulling back from the soaring gains made in recent weeks fueled by reopening optimism. Movie producer and cinema operator Huayi Brothers Media fell 2.75% and home-appliance maker Hangzhou Robam lost 3.3%.
Hong Kong stocks ended the session slightly lower, extending a muted trading pattern so far this week in line with their mainland China counterparts. Chinese equities have been cooling after a blistering new-year rally driven by reopening optimism. Renewed worries over more aggressive Fed interest rate increases and slowing global growth have added further pressure. The benchmark Hang Seng Index edged down 0.1% to settle at 21283.52. Tech companies led losses as the sector retreated from strong gains on Tuesday. Meituan dived 6.5%, Alibaba Health dropped 3.6% and Baidu was down by 3.1%. The Hang Seng Tech Index ended 1.9% lower at 4431.58.
Japan's Nikkei Stock Average fell 0.3% to close at 27606.46 amid mixed signals. Federal Reserve Chair Jerome Powell acknowledged easing inflation again but added that restrictive monetary policy may persist longer than expected, Phillip Nova market analyst Priyanka Sachdeva explained in a research report. Nintendo slid 7.5% after cutting its FY revenue and net-profit forecasts. SoftBank Group shed 5.1% after posting a Q3 net loss, missing analysts' expectations. Meanwhile, Kyowa Kirin rose 6.45% after projecting a 42% increase in FY net profit.
Indian stocks ended higher, tracking overnight gains on Wall Street after Fed Chairman Jerome Powell acknowledged easing inflation, but also confirmed more interest rate hikes will be needed. The benchmark Sensex index rose 0.6% to settle at 60663.79. IT-services providers led gains, with Infosys rising 1.75%, Wipro up 1.6% and HCL Technologies gaining 1.5%. Auto makers lent further support to the market. Tata Motors edged up 1.1% while Maruti Suzuki rose 0.7%.
Europe
European stocks traded mostly higher as investors continued to digest Tuesday’s remarks from Federal Reserve Chair Jerome Powell. The pan-European Stoxx Europe 600 index rose 0.3% and the German DAX gained 0.6% while the French CAC 40 fell 0.2%.
"Investors appear a little relieved at Fed Chair Jerome Powell sticking to last week's script despite Friday's jobs report indicating that the labor market remains red hot," Oanda analyst Craig Erlam wrote. "It would appear traders had become a little more defensive on the expectation of a hawkish shift, but Powell refrained from taking the leap."
The British FTSE 100 closed up 0.3% as BP and the wider oil sector pushed the index to its highest levels since 2019, CMC Markets analyst Michael Hewson said in a note. As natural gas prices fall again, investors are more optimistic on the UK economy, according to IG analyst Chris Beauchamp.
"While these falls have yet to feed through to consumers, they do suggest the squeeze on incomes may ease during the course of 2023," Beauchamp added. BT was the session's biggest riser followed by BP, both up 3.3%, and Next, up 2%. DS Smith was the day's biggest faller, down 4%, followed by Smurfit Kappa and Mondi, both down 2.3%.
North America
US stocks fell Wednesday, reversing the prior session's rally, as investors focused on what recent remarks by Federal Reserve Chair Jerome Powell mean for the trajectory of interest rates.
The S&P 500 retreated 1.1%, a day after the benchmark index jumped 1.3% in a volatile session. The Dow Jones Industrial Average fell 0.6% while the Nasdaq Composite Index lost 1.7%. On Tuesday, all three indices closed higher.
One focus for investors this week has been comments from Fed officials. Following Mr. Powell's remarks on Tuesday, Fed governor Christopher Waller said in an appearance Wednesday that the central bank will need to keep monetary policy sufficiently restrictive for a few years to tamp down inflation. He added that the quarter-percentage point increase the Fed approved last month "seems like the right size to adjust policy."
Traders will continue to watch for any shifts in tone after last week's stronger-than-expected jobs report, which stoked concern that the Fed could end up tightening monetary policy by more than expected.
US stocks were whipsawed Tuesday after Mr. Powell's remarks in Washington, when he reiterated that lowering inflation will be bumpy and that more interest rate increases are on the way. Still, some investors who had braced for Mr. Powell to indicate a more aggressive interest rate trajectory following the jobs report instead found relief in his remarks, sending indices up to finish near session highs.
"The magic word now is 'disinflation' -- the market is becoming obsessed with this," said Charles-Henry Monchau, chief investment officer of Geneva-based Bank Syz. Last week, Mr. Powell said that the disinflationary process has started, a sentiment he reiterated Tuesday.
In addition to Fed speakers, investors will also be monitoring another batch of earnings reports this week. Robinhood and Walt Disney are among the companies that will report after markets close on Wednesday. Disney's earnings represent an early test for newly reinstated Chief Executive Robert Iger.
Uber Technologies and CVS Health both rose after posting results. Uber stock jumped 4.8% after it reported a rise in revenue and adjusted earnings last quarter as people spent more on rides and food delivery despite concerns about inflation.
CVS shares rose 4.3% after it agreed to acquire Oak Street Health at a valuation of about $10.6 billion, including debt, and it said its net income and revenue grew, thanks to gains in the company's insurance and pharmacy services businesses.
Meanwhile, Manchester United stock jumped 9%, on pace for one of its best days ever, after a report that Qatari investors could bid for the British soccer club.
